Skip to main content

tv   Worldwide Exchange  CNBC  October 4, 2012 4:00am-6:00am EDT

4:00 am
welcome to "worldwide exchange." i'm beccy meehan. these are your headlines. aggressive mitt romney comes out swinging in his first debate with president obama with the two men sparring over how to fix the u.s. economy. waiting on spain, the ecb expected to hold steady on rates. country's president tells cnbc that europe's policymakers must remain focused. >> if we get bogged down into what was meant by the june agreements and waste time on this kind of discussions, then it's much less likely that a coherent system will emerge. >> madrid continues to put faith in the hands of private investors while finance minister
4:01 am
heads to london to raise funds for the country's bad bank. and india's crucial services sector grows at its fastest rate in seven months, while the government gets set to take another swing at boosting it through foreign investments. thanks very much for joining me. anyone that's missing ross, he'll be back in tomorrow. but for now, you're all mine. . plenty to come on the next couple hours of the show. lots of guests to help us figure out what's going on. we'll get a view from sydney about cautious shoppers. borrowing costs are expected to fall. we'll bring you those results from madrid.
4:02 am
and we'll head out to malaysia for an exclusive interview with the country's prime minister. it's very presidential music to bringis to this topic, which is really dominating the headlines today. president obama and republican rival mitt romney met face to face last night in denver, colorado for their first u.s. presidential debate. it really focused mostly on the economy. with a mnt to onth to go before election, both men had to prove to voters that they're the right man for the country. john harwood got a firsthand view of the debate and filed this report from denver. >> the first of three presidential debates here at the university of denver was a strong one for mitt romney. he came out very aggressively in confronting president obama on his record over the last four years, taking on on the president over his failure to reduce the budget deficit, over job creation, over obamacare,
4:03 am
over the regulation of wall street and dodd-frank. had some success in pulling the election back from a choice election as president obama wants to be about their visions going forward into a referendum on president obama's record in the first four years. mitt romney looked very comfortable and pleased to be on the stage. he knows that he only has a few weeks left to go to reverse president obama's lead. president obama on the other hand did not always look so pleased to be challenged the way romney was challenging him. he did not make any big mistakes and one of the questions coming out of this debate, as good as republicans feel and as middling as testimonies feel about this performance, did it really do enough to change the dynamic in the race.feel about this performance, did it really do enough to change the dynamic in the race. next week it's paul ryan and joe biden. and then two more presidential debates. we'll watch the polls for see the impact. >> what was your verdict? we all have our own panel of strategists that will be coming
4:04 am
up at 11:30 cet, that's 5:30 eastern. but we do want to hear from you, as well. what did you make of the debate and performance of each of the candidates? you can send us an e-mail at or via twitter, follow the sh show @cnbcwex. or tweet me directly. several of you already writing with your thoughts. @beccymeehan. let me know what you think about the u.s. presidential debate. there are still more to come and we'll get to some of your comments later this the show. now, one of the other big stories today, the european central bank meets in slovenia, expected to hold back on any action as it waits for spain to decide ifle it will finally ask for a bailout. silvia wadhwa is reporting for us from the outskirts of the
4:05 am
slovenia capital. we obviously know the ecb travels around to these events, but where are you exactly? you're not really in the capital, are you? why are they meeting there? >> i think because it's a convenient location. it's a conference center with a big park around it, both from the security point of view and from simply from the logistics point of view it's probably very convenient rather than smack inside. they did have a meeting there yesterday with bankers, some evening reception. and i know mario draghi met to talk about the situation. slovenia sadly is one of the countries very much on the one to watch list. the head of the euro group said the other day that the situation was very serious and slovenia might be on the brink of a
4:06 am
bailout. the president denied that, he said he didn't think slovenia needed a bailout. he also didn't think spain needed a bailout, but it was early days yet. he was, however, very concerned by the persistent breakup talk that is wirling around the eurozone. and also by the fact that political efforts along the lines of banking supervision seem to have stalled. but listen to what he had to say. >> we don't like these discussions because we know from our experience that these discussions create an independent political dynamic and we see elements of this also in the media when one reads the needed i can't in english language, which is what everyone does now a days, we see a lot of rather cynical talk, rather unfireable talk about europe.
4:07 am
not nimply well founded and not necessarily without leverage of prejudice against the euro. >> silvia, what are we expecting from the ecb today? because we've had some of these big programs announced already. it will take a while to get anything worked through. >> i think the ecb is in waiting mode. they firmly threw the ball back into the court of politicians. we know whatever the ecb will do if it embarks on an omt program we'll have a number of pre-conditions. the first is that the esm has to be on track and operational. that hopefully will happen next week. and after that, the next point of conditionality, a country in
4:08 am
will have to appeal for a bailout. we haven't figured out what kind of a bailout. they haven't flushed that out. or rather said it's up to politicians how they define bailout programs. but that has to happen before anything can happen in the secondary market. so we're a little bit in the waiting loop. but i think a lot of discussion will swirl around the omt program and what exactly conditionality means for the ecb. >> stick around if you would. we have a guest here, he'll help us understand what's going on. we'll talk about spain in a moment's time, but let's think about the ecb in general. we've had the omt. what will the ebc do next?
4:09 am
because they've thrown the ball back into the court. is this bas >> basically leaving to the politicians. but the problem is that draghi's first move if august he put a bit more meat on the bones, but we're still waiting. markets are waiting for spain to put its hand up and ask for assistant. and the problem with all of this is that we could be here a week from now, a month from now, nobody has a clear time line. >> silvia would like to ask a question to you. >> yes. we'll try to get back to the issue of banking supervision and banking union. i had the feeling from when we came back from the eco fin meeting, already there was a bit of maybe we don't have to stick to the time line, and slovenia president was a bit concerned
4:10 am
with the way maybe the whole banking supervision plans have stalled. >> i think banking is a bit of a red herring. it's obviously something politicians are thinking about, but specifically with respect to spain, i think it was pretty clear from the outside back in july, they said this is clearly going to spanish sovereign. so in terms of outside perceptions, the money is going to the spanish government, it's not going to spanish bank directly. so there's not really such a need for banking in right away. the main will go to spain one way or another. longer term issues, yes, you need a banking union in europe, but it's not solved before the end of the year. >> maybe not quite red herring, you butt conditionality that the ecb set on its own program.
4:11 am
whenever we ask ecb program what does it mean, they say it's not up to to us decide.set on its o. whenever we ask ecb program what does it mean, they say it's not up to to us decide. is it another line that could shift in the sand rather than cast in stone? good i think there's uncertainty. there's two sorts of bailouts that draghi basically talked about, one is the full bailout similar to ireland, the other is enhanced credit condition line, which is a light version of a bailout. the idea that politicians deciding exactly what sort of reform spain has to implement and as long as you sign on a piece of paper, that gives the green light on go ahead and buy. as you said, i think draghi is basically leaving it up to the politicians to decide and he's happy to stand aside. for us the argument is really the ecb should be doing much more than it does. it shouldn't sit back and wait for spanish politicians to sgi
4:12 am
chen is the right team. ecb really should do more, talk about the poelt of providing first stimulus. he needs to set it aside from the omt because that's not the only problem in europe at the moment. >> silvia, we'll check back in with you you later in the show. get a coffee. relax. and we will pick up this conversation. want to talk about the bank of england, as well. policymakers expect to hold off stimulus when they meet today. this month's interest rate meeting comes after a run poor pmi data. analysts now forecasting a further cash injection but later in the year. you've written about the bank of england, as well. many are expecting more qe to come. when do you think we'll get a move? >> i think realistically obviously they're on hold.
4:13 am
the choice is where they into in november or december. i think king can stand up and layout his vision for the next few months. the argument for december is a bit more subtle. at that point the government will publish its latest fiscal projections and in some ways there will probably be a better time for to make up its mind. and they'll have a much better idea of what's happening to the economy, how many further tightening to introduce or not and i think they can respond in a more educated manner. >> christmas present for the uk then. okay. stick around. we'll get a bit more into the spanish story, as well. but let's check in on the markets in asia a. a quick look at what's going on across the region. a week when we have no shanghai
4:14 am
composite at all. the kospi is back after being off yesterday. hong kong had a long weekend, too. but we are seeing gains. let's check in with singapore. >> asian equities mostly finished higher helped by economic data from the u.s. closed marginally in the green. standard charter's hong kong listed tracked shares in banking stocks despite reports of a dispute with its largest shareholder temasek, but weakness in energy majors offset gains on that market due to slumping oil prices overnight. japanese stocks pushed higher in late trade following the u.s. presidential debate where governor romney the pro business candidate appeared to outshine president obama. so the nikkei rebounded off a four week low with automakers and financials surging. but tech shares lost ground after hewlett-packard's profit
4:15 am
warning. hp contract makers in taiwans also felt the pain with the computer share sub index losing 1.6%, but tmanaged to close fla. we saw a bit of profit taking on samsung electronics ahead of its q3 earnings guidance tomorrow. australian miners were lower, but banks lent support to the afx 200 ending at a 14 month high. weaker than expected august retail sales added to the case for further interest rate cuts. sensex stronger by 1% at the moment. >> let's pick it up with the european markets. equity to modest moves ahead of the bank of england rate decision. we'll have that for you live. louisa will help us figure out what's going on there.
4:16 am
dax ahead of the ecb decision up by 0.3%. a few points added on to the cac, as well. spanish market managing to shift up by half of 1%. let's look at what's going on with the bond markets, too. again, in advance of the ecb decision, the ten year in germany very low, 1.45%. in spain, though, where much of the attention will fall. 5.9% right now. we do have a spanish bond auction later, so we'll bring you a bit more detail on that. italy, 5.12% for the benchmark ten year, which is very much more under control. and here in the uk, ahead of the bank of england, 1.69% is where .e are for the ten year debtt cu market, euro-dollareuro-d right now 1.2950 with the euro edging up by nearly 0.4% against
4:17 am
the dollar. of course bear in mind the ecb decision. dollar-yen, strengthened. aussie dollar had big moves this week. we had retail sales data which we'll discuss later on the show. we also had surprise trade testify sit data and the rba cut rates by 25 basis points. so playing a pretty cautious gain here at the rb about a, worried about the situation with chinese growth. so we've seen that reaction playing out in the currency markets there. and sterling-dollar, shifting up by 0.3% to 0.4% against the dollar. so back to the australian issue. why shoppers aren't reaching for their wallets. more on that.
4:18 am
4:19 am
4:20 am
broke through a key barrier since april. the government's getting ready to announce more reform measures to boost the economy. we go live from mumbai for the details. >> thanks so much for that. a combination of factors have
4:21 am
resulted in the ruppee versus te dollar. on the agenda, they will be mulling increasing the fti capital insurance to 49%. also in opening up fti in the pension sector, as well. a 26% cap. so these are a couple of the details. we're waiting more details on the bill and act. so it will be a very important session with respect to the cabinet. but to caveat all this, even if the cabinet does approve it, you still need parliamentary approval and that debate will only happen in the winter session of the parliament in december. but apart from that, one of the key positives can happened in today's today, pmi number for india stands at a seven month high. and this index has been above the 15 mark which indicates
4:22 am
expansion since november of 2011. an as i said earlier, this stands at a seven month high. newed orders have expanded at a very fast clip. also as per the commentary that the hsbc got, the company optimistic on the outlook and even the composite pmi has stood at 55 in september, was 54.3. but apart from that, all eyes will be what comes out of the cabinet meeting today. back to you. >> thanks so much for that reema. so let's talk spain again. spain should see yields drop at a dealt auction this morning. hard to say that string of words. they're auctioning debt and hopefully we'll see the yields coming down a little bit. those results due around 10:40 cet. expectations that the government will make a bail outquestion have helped keep borrowing costs low. investors still wary about
4:23 am
prospects. for the first time since 1995, the company's lenders have more spanish sovereign debt than their foreign counter parts. does it make a difference who owns the debt and is the tipping point between domestic and foreign ownership? >> i think will is an issue that i guess probably most need foreign investors buying debt. they need outside investors to support their bond market. what you see in spain, though, is an interesting development where past the second ltr, spanish banks were going in and buying debt quitinge aggressive. and then they couldn't take it done any longer. so the row portion might be going up, but it's truly i think investors are probably selling their stake in spanish debt even moring a agreesly than before.
4:24 am
>> when we get the yields out later, does the arch yield really reflect what's going on in the spanish economies? it's a number every is going out for. >> people realize that you need to see further stress in the system somewhere along the way for arerajoy to finally ask for bailout. but the economy hasn't made a lot of difference fundamentally all has been sliding deep hener to recession. and in the markets have been very much a risk on mood since early august. so there is that inconsistency. which maybe ecb isn't quite picking up on. they're focused too much what's happening in the markets and not the real economy. >> thanks very much for spending time with us. august retail sales figures rows only marginally as cautious
4:25 am
shoppers cut back on discretionary spending. the data suggesting consumers are going to cheaper offerings. stocks slipped in reaction to that news. spin off in aisle three, wool worth's is reportedly set to demerge it property holdings in a $1.4 billion deal. it would hold 70 centers, about 400 to 500 million dollars in equity will be launchraised if launch goes ahead. almost a quarter of the firm's market value was wiped out after a report said tpg may pull its $700 million takeover offer. they have requested a trading
4:26 am
hold. tpg has declined to comment. from an investment point of view, are there any decent investments amongst australian retailers right now? >> not that i can find, beccy. it's not pretty out there and australian rate sector is under fresh from two forces. we've seen a substantial reduction in consumer debt and the pain has been born by the debt. so they're increasing their savings substantially. i think that has at least five years to run, that process of repaying debt. and as you've already touched on, we have a lot of competition coming on into the australian market thanks to the high aussie dollar.
4:27 am
these business models are doing a lot of damage to the australian rate tellers. >> when you get added competition like that, obviously it hurts domestic retailers for a while, but surely there's enough entrepreneurial spirit in the australian economy for some home grown retailers to come back to equal or better those offerings from oversees. any names that might be able to achieve that? >> nothing in the brick and mortar space. we've seen a cup he retailers replicate the overseas models and to quite well, but even the fashion rate we're ten years behind in terms of the actual business models. mofs of the australian retailers are one line of stock for sum he, another line for winter.
4:28 am
so i'm sure well see with the competition will force people to come up with similar or new business models here in australia and we're definitely seeing some of the online websites do quite well here that are being started by a younger generation of people that are coming at it from a very different perspective. old school hasn't been willing to change it. >> sounds like an opportunity then if you can bust it open. let's talk about the rba where we have the rate cut beginning of this week. will that cut a bit of slack in the retail space as consumers have maybe a bit more money to spend? >> i don't so think. the exchange rate needs to come off a lot further yet for people to start feeling comfortable about the australian which i. we've seen the terms of trade in australia, kra fall quite substantially. and i think we'll see that fall a lot further as the chinese economy slows and commodity prices come off. what we want is the exchange rate to fall in con skrunjunctih
4:29 am
that so we get relief in what have been the struggling parts of the australian economy that are suffering because of a high australian dollar. i think the reserve bank wants to see the exchange rate come down much further than we've seen so far and so does the rest of the australian economy. so i think 95, 94 would start providing some relief and that's where we'd like to see it. >> steve, thanks for that. still to come, despite stellar growth, malaysia's leader says the country still hasn't fully tapped its own potential. exclusive interview with the prime minister coming up. >> we are trying to develop the support very strong domestic economy. and the engine will come from the domestic economy. that's why we've done everything possible to encourage it
4:30 am
necessary tick i domestic investment. >> also results of the spanish bond auction. julia is in madrid. >> thanks, beccy. expect to go well despite relatively chunky 4 billion euros at the top end. we will bring you all the latest after the break.
4:31 am
4:32 am
4:33 am
waiting on spain. ecb expected to hold steady on rates when central bankers meet today. the country's president tells cnbc that europe's policymakers must remain focused. >> about if we get bogged down discussion of what was hent by the june agreements and waste time on this kind of discussion, then it's much less likely that a company here represent system will emerge. >> madrid continues to put its faith in the hands of private investors. sfi nance minister heads to london. and the government gets set to take another swing at boosting it through foreign investments.
4:34 am
>> we're looking at small declines. eibexle holding up relatively well. remember, we do have the ecb and the boe decision coming out a little bit later on today. so there will clearly be a reaction to anything we get out there. yields in spain, 5.86%. in addition to the ecb issue, there's also the issue of if and when spain will ask for a bailout, but we'll come it that in just a moment's time with julia. so back to spain then.
4:35 am
results of spain's auction due in just about ten minutes time or so. julia has been keeping up with the developments in the past few days. julia. >> they are 00 auctioning two, three and five year debt. expected to try and issue around 3 to 4 billion euros. traders i'm speaking to expect to go pretty well. the last time they auctioned five year was in july the 19th. spreading significantly higher at that point. today trading around 4.9%, so much cheaper than what they were paying back in july. and of course the certainly supporting the curve at that point, too. you have to look at a short h e
4:36 am
here. >> economy minister trying to drum up investments for spain's bad bank. coming here to london. what do you think the story that he'll be coming here with? >> i hope he takes more details than we've got right now. a lot of head scratching going on here in spain. how on earth is he going to value these assets to keep both the banks happy and also investors. property prices 25% drop since the beginning of the crisis. an lis are estimating they could fall another 20% to 30% over the next couple of years. all these things have to be taken into consideration. he said the valuation will be done conservatively, but then he tempered that by suggesting this is a 15 year project.
4:37 am
still consternation around the stress test, is 60 billion euros going to be enough. so when he meets today, there will be pretty keen questions just about how they'll get value out of this deal. >> we'll check back with you in a moment. four of the banks passed the ratio test including banco popular. it they had a capital shortfall and have hired two banks to lead its 2.5 billion euro capital increase which is intended to cover that shortfall. in france the four largest banks there also passed the test.
4:38 am
let's get more information from stefane. >> not a big surprise there were no gulps that any of the four largest banks in frances would miss that target of 9% for the ratio. bnp is the most. second one, credit agricole. and then bpce, owner of the investment bank, 10% for its core tier one ratio. the least capitalized bank, 9.9%, societe generale. still well above the 9% target set by the eba. that's the consequence of course of their restructuring plans and demerging process. so not a big surprise, but still good news. >> okay, stefane, thanks for that.
4:39 am
let's get more of this from chris wheeler. david, are we going to see unintended consequences from the eba from what you have written about, the banks would have wanted to use this extra capital for other actions that you would expect banks to engage in and actually going to have to keep it stuffed away under the mattress. we just end up continuing to n constrain economic recovery. >> we'll constrain the shareholders and employees. i think it will have a less direct impact on lending. the eba is trying to play conservatively and trying to reinforce their credentials. which the reputation has really
4:40 am
been strained by stress tests that have been -- the markets basically made a mockery of them. and what's going to happen is it will be harder for the banks to buy back their own stock, there's going to be a lid in some cases on big bonuses for top executives. but i think most people in the market maybe with the exception of the bankers themselves think that's a good thing to be doing. there's still a lot of uncertainty out there and the eurozone price has taken a breather. but i don't think anyone thinks it's resolved. >> chris, are these being as to be taken to he reshape european banking for the sector after the eurozone crisis? >> it's a first step. one point we have to take into account, at the end of the year effectively in terms of what the banks will disclose, but we'll see a different capital ratio next year which will be considerably weaker than 9%.
4:41 am
so this was a first step just as we saw with the spanish stress test over the weekend. but as my colleague said, a lot further to go before we get complete comfort on those banks. >> a lot going on in the banking sector. everyone wants to weigh in and save the day. but i'm worry this had is getting confusing for the layman as well as the banks, too. we have the independent commission on banking, the eba. are we getting closer to a coherent policy around the european bank that will actually work rather than this muddle? >> well, it's regulation overlaying regulation. this is a concern i have. if we look at the uk banks, you have to flow into the part saying we actually think that because it's watered down, we
4:42 am
would hold up the banks. so instead of saying we'll get on with lean fencing, i wouldn't do that. why what you do that when 2015, there's every chance you'll have a government that will say we'll link up the fence. barclays you have a much more tough issue to deal with. his 153 page report tell me what did happen in the crisis which i think i know now is quite short what he actually says he thinks we should be doing. but the key thing is lean fence the investment bank, not the retail bank. so it's difficult for management to try to plan for bank management and do what they're supposed to do. help support the economy. >> i agree it's difficult, but i think it's inevitable byproduct of having these giant banks that are spanning many different continents frankly. we have it u.s. with the volcker rule, vickers here, europe, and
4:43 am
this is what happens when you have these enormous banks that are basically for better or for worse much better than some of the local economies in which they operate and i think it's inevitable that you'll have policymakers begin the enormous catastrophe economically and financially that we'll have in some cases exaggerated policy responses and overlapping policy responses. i don't have a tremendous amount of sympathy for the banks moaning about how complicated it makes their lives. it is complicated, but it is something that's the result of an enormous financial crisis. when you have giant cross border banks, that engenders cross border policy responses. >> and in that context, chris, you have buys on hsbc and barclays which are exactly those kind of institutions which are cross border complicated.
4:44 am
>> if we want to actually see the economy globally growing, then you can't sit back and say the fact the banks can't play, if you're sitting inside those bank, you have shareholders, an audience to look after, and lots of other audiences. >> do you think banks are saying we're not going to make a loan because we're not sure how vickers will wrork? i don't buy that. i think they're delaying structural decisions and delaying maybe cost saving measures and maybe some corporate things like buy backs or difference can tend plans. but i really don't think someone sitting at the top of barclays scratching their head saying we don't know how this will be implemented so we'll hold off in doing this big corporate loan. >> i disagree. i think the answer to that is strategically, they have to plan when to go forward. and inevitably he'll still be
4:45 am
doing his day to day job, there's no doubt that the distractions are enormous. i don't think that's helpful at all. i totally agree we have to have greater regulation, no argument about that whatsoever. but to not is a negative issue but actually in my space, the u.s. and uk banks, it's difficult to find names where you get some kind of view there's some kind of comfort. hsbc's great benefit is of course it's gone into this and come out of thises as strongly capitalized and really well diversified and it's diversified into markets that aren't developed markets. in addition, i think the interesting thing there is they're actually just about to unload a big chunk of the old household business in the united states where they've been if you want getting ready to actually start to sell what a run is portfolio and get one of the biggest monkeys off it shoulders. barclays has three great
4:46 am
businesses. but even on my recommendation, it's probably still going to be sitting on its book. it reflects the risks that exist there. >> you did disagree, which always makes for great tv. we'll have you back on together at some point. di thanks, david and chris. shops closed down in tehran on wednesday as iranian authorities used aggressive tactics to disburse thousands of protestors. the demonstrations the first time in 30 years that the merchant class publicly turned against the government. ahmadinejad has blamed international sanctions for the country's devaluation, but hillary clinton says the government only has itself to blame. we also have results coming out of the spanish auction, as well.
4:47 am
spain selling 210 million euros for the 2017 bond, the longer bond selling 1.9, just shy of 2 billion euros of the october 2015 bond, as well. the bid to cover on the 2014 coming in at 2. so up on that front. the 2015 auction bid to cover ratio, 2. bid to cover rising for that one, as well. just waiting for the average yields to come out which will come in just a moment's time, but the bid to cover also up two for the 2017, longer auction for spanish debt. bid to cover on the 2017 coming in at 2.5. and the last auction looking at a level of 2.1. so we've got a bid to cover up for each of those auctions. so we'll bring you the average yield just isn't we get it. in the meantime, let's just head out to julia and get reaction
4:48 am
from the ground there. >> we're still waiting for the rates i can see, but just doing a mental calculation, just shy of the 4 billion. so in my estimates, that takes us to around 88% done now for their funding requirements. total target 86 billion euros. of course there is a risk to the top side there. but good news on the bid to cover ratio. i'm expecting to come in significantly tighter than what we saw back in july. so looks pretty good. the market continues to do the work in delaying any kind of assistance request. >> okay. julia, thanks for that. we will keep our eyes across these figures. still waiting for the yield which is that all-important number. in the meantime, a quick look at what's going on with the yields on the ten year. 5.874% is where we stand right now. we'll be back shortly to bring you more what's going on in spain. also malaysia's prime minister
4:49 am
telling us why his country is doing so well.
4:50 am
4:51 am
4:52 am
more on the spanish bond auction. bid to cover ratio up on each the three and the yields coming down. 2017 the longest bond auctioned off today saw the yield at 4.766%. down from 6.459% last time around. the 2015 bond 3.956% down from over 3.8% last time around. the shortest term bond, 2014, the yield at 3.282%. last time around, it was over 5.2%. so significant moves on the back of robust demand. so let's move on. astro looks set to raise $1.5 billion after pricing shares at the top end of its range. last year's deal expected to lift malaysia's ipo something north of $7 billion. that and the strength of the
4:53 am
country's domestic economy led to hike to 4.6% growth this year. cnbc spoke with the malaysian prime minister. asked how he intends to keep his any growing in uncertain climates. >> the global economy is beyond us, you're absolutely right. and we've taken that into account in the sense that we have tried to develop for support of any strong domestic economy that's resilient and the engine of growth will come from the domestic economy. that's why we encourage business. >> is malaysia too dependent on resources, on commodities for to make it way in the world especially with regards to
4:54 am
basically your balance sheet. the state oil giant accounts for a huge a government revenue. isn't it time to wean the government off too much dependence on foreign revenues? >> yes that's going to be our medium term strategy because over the dependence on oil as a finite resource is not good. we have to educate our people, as well, because petrol and ltg are very high will you sly subs this country. people scream when you try to raise the price of petrol, but people have to be realistic. in the long term, we cannot be over dependent on subsidies. and we have to diversify the economy. especially in terms of government revenue.
4:55 am
and this is what we're going to do. we are creating more and more growth industries that will give us a strong financial base later on. >> the future of made laid i can't, the plan to transform it, let me ask you in order to chief that target, that goal, how important are these upcoming elections for you and how important is it that you receive a freshman date? >> i'd like to have a strong mandate because to achieve our vision of a fully developed
4:56 am
nation by 2020, the next five years will be very crucial final you're talking about going down the stretch and this is the most critical time because we really have to deliver on that. and this is a firm commitment made by my predecessor in early 1990. now it's my turn to deliver that promise to the people. >> does that put a lot of pressure on you? >> in a way it does, but i don't lose any sleep over it in a sense because i tell myself it is a challenge, but we've done the numbers. we've worked out a wonderful plan. i think we know the direction. but the most challenging part is to get the how part. and the how part we worked out
4:57 am
in the numbers. but as you know, there is the x factor. and it's all about confidence. if people have confidence, the market are confident, then things do happen. >> tune in this weekend for the full interview with the malaysian prime minister. still to come on this show, who came out on top? more analysis on the u.s. presidential debate. don't forget to send us your thoughts on twitter. @cnbcwex or @beccymeehan.
4:58 am
4:59 am
5:00 am
welcome to "worldwide exchange." these are your headlines. aggressive mitt romney comes out swinging in his first debate with president obama with the two sparring on how to fix the u.s. economy. the ecb expected to hold steady on rates when center bankers meet in slow screen kra today. country's president says europe's policy makes must remain focused. and madrid sees sole lid demand as an auction yields coming down. finance minister heads to london to raise funds for the country's bad bank.
5:01 am
thanks very much for coming along. we are looking at market action ahead of the ecb and bank of england policy decisions coming out a little later on. ahead of that, we're expecting the u.s. markets to open just a fraction higher. we are also looking at european equity trade which is a bit coming off these markets. we had seen mod zeest gains, bu now modest declines. in the bond markets, this is the picture. we have a spanish debt auction just in the past few minutes, those results hitting the wires showing that jeelds have come down across the board and the bid to cover ratio has gone up for that spanish debt. so pretty robust demand. let's look at what's going on with the ten year and germany. just over 5.1% for italian debt.
5:02 am
euro has been holding just under the 130 level for a little while now. dollar-y dollar-yen, australia, the rba cutting rates. aussie dollar seeing that play out. and sterling up by a quarter of 1% as we go into the results of the bank of england decision. now let's look at what's going on across asia. markets disrupted this week. a lot of public holidays. shanghai composite out of action all week long. a long weekend in hong kong. kospi in and out of action. but at the moment markets trading up for much of this region. let's check in with singapore. >> most asian bourses gained ground helped by upbeat u.s. economic data.
5:03 am
standard charter odd hong kong list of shares tracked gain this is think about aing stocks despite reports of as it is sput with it largest shareholder temasek on corporate governor nance. a slump in oil prices overnight. japanese stocks pushed higher later in the session following the u.s. presidential debate where governor romney, a pro business candidate, made a competitive he showing. the nikkei rebounded off a four week low with automakers and financials surging. but textures lost ground after hewlett-packard's profit warning. contract makers in eye with an also took a beating with the computer share sub index slipping 1.6%, but managed to close flat. we saw a bit of profit taking on samsung electronics ahead of it q3 earnings guidance tomorrow. australian miners were lower, but wleptd support to the 200
5:04 am
ends at a 14 month high. weaker than expected august retail sales added to the case for further rate cuts. sensex still higher by 0.9%. back to you. president obama and mitt romney met face to face last night in denver, colorado for their first u.s. presidential debate. they focused mostly on the economy. with a month to go before the election, both men aim to prove to voters that they're the right choice to lead the country for the next four years. john harwood got a firsthand view of the debate and filed this report. >> the first of three presidential debates here at the university of denver was a strong one for mitt romney. he came out very aggressively in confronting president obama on his record over the last four years, taking on the president over his failure to reduce the budget deficit, over job
5:05 am
creation, over obama care, over the regulation of wall street and dodd-frank. had some success in pulling the election back from a choice election as president obama wants to be about their visions going forward into a referendum on president obama's record in the first four years. mitt romney looked very comfort only and pleased to be on the stage. he knows that he only has a few weeks left to go to reverse president obama's lead. president obama on the other hand did not always look so pleased to be challenged the way romney was challenging him. he did not make any big mistakes. one of the questions coming out of this debate as good as republicans feel and as middling as democrats feel about this performance, did it do enough to change the dynamic in the race. next week the vice presidential debate between paul ryan and joe biden. and then two more presidential debates and the election will come soon after that. we will watch the polls to see the impact of this. back to you. >> so the european central bank meets in slovenia today, expected to hold back on any action as it waits on spain to
5:06 am
decide if testimony ask for a bailout. silvia wadhwa has a review what have we can expect. >> well, in a way it's a sort of meeting after the meeting and maybe a meeting before any further decisions. because obviously after the omt program was announced, the ecb pretty much feels they've done their bit if that's the right way of putting it. and now it's up to politicians to do their bit. meaning spain has to decide if it wants some kind of a bailout or not. and then once it's on track hopefully after the next finance minutester's meeting, then they can decide whether a bailout program will happen and whether it will buy indeed bonds in the primary market and then the ecb could come in with a flanking action in the secondary market. that seems a long way down the road yet. so at the moment, i think it's more about the it fine print. we know very well from mario draghi that he keeps saying
5:07 am
conditionality is keep to whatever the ecb could do in the bond market, but he hasn't quite defined how conditional conditionality is, pardon the pun, because of course it could mean full bailout, it could mean bailout d bailout-like, or any of the other things the ecb might i'd if i as some kind of complain ality and tal ality conditionality and the market might call the ecb's bluff on whether or not they would not buy bonds. but at the moment, it's just if, if, if. at the moment i think we're just waiting to hear a bit more fine print from draghi at the press conference. >> thanks for that. we'll come back to you later on. joining us for a bit of a debate around this is head of developed markets rate strategy at citi. thanks for coming along. so what are you expecting from the ecb, when will they move
5:08 am
next? >> i think today will be a monday event. the market is not pricing any in move. if there's going to be a change in policy, it will happen probably towards the end of the year and then most likely forecast also another change in the first quarter much next year. so it's all about expectations for the future. >> how do you trade around those expectations? >> the way to trade around it is to carry. the ecb has carry rich. you have on libor a quite steep structure. and so what we expect our baseline scenario to profit from long positions there.
5:09 am
>> let's put this into the context of what's going on. we have the central banks and developed markets, the bank of englands as well today, most people agree that we won't get anything from the bank of england until november, december. any thoughts there? >> i think with regards to the fmoc minutes, what we'll get is most likely some sort of sense for unhappiness with regards to the measures that have been taken, the effectiveness of those measures and especially the use of the forward guidance as compares to for example the expansion of the balance sheet. so i think a lot of this discussion will be centered
5:10 am
around employment rate for example as compared to inflation targets. but also the fact that actually the fed has not delivered on those imflied quantitative targets. when it comes for the bank of finland, even their expectations are to happen towards the end or maybe at the beginning of next year. i don't think it will are lower rates but more in terms of scaling up the quantitative easing program. >> how politicized is the ped in your view at the moment and i guess the parallel question, what difference does the outcome of the presidential race make to what we should expect from the fed in the longer term? >> i think the fed -- i don't think the political trajectory has an impact on the fed. the fed is quite keen on pushing forward a new agenda, a new way of making monetary policy. i think the old way of looking exclusively at some sort of loss function defined as distance
5:11 am
between realize inflation and target is a business too narrow minded in the context of what's really happening in global markets right now. so i would say in the future the discussion is really going to be about a complex multitarget, multiobjective kind of making policy. good okay. thanks for that. so hedge fund manager who builds a major position is seeing it pay off. his third point offshore fund gained 3.4% in september, helped by its bullish position on greek debt. increased the fund's exposure to european credit in an tigs pace of a strong reaction from the ec about that. he said markets were mistakenly pricing in a greek exit. coming up next, find out why applied materials is chipping away at it workforce.
5:12 am
5:13 am
5:14 am
romney and obama spar over the economy with the presidential challenger coming out swinging. the ecb seeing holding steady on rates when central bankers meet today. spain sees yields fall as the finance minister tries to drum
5:15 am
up interest in the country's bad bank. in an interview with swiss paper, it was conceded swa it tz would struggle to reach its target. while it pledges it future to its home country, fiat could be doing the opposite. in an interview, the ceo says the firm won't be launching any new molds in italy before 2014. and says the firm has stopped investing in italy and would have gone bankrupt if it had pressed ahead with plans to renovate in that country. applied materials plans to cut between 900 and 1300 jobs. that's 6% to 9% of its workforce. the chip equipment maker has been struggling with lower sales.
5:16 am
it hopes to achieve most of the cuts through retirement packages. stock trading down today in the german listing. this is a three month chart. over that period, down by over 3.5%. so morgan stanley reportedly in talks to sell a majority stake in its commodities unit to cut sovereign wealth fund. the move would let traders continue for their own books, but u.s. banks would be banned by new regulations under the so-called volcker rule. this is a three month chart which shows a pretty steady move to the up side by over 11% during that period. marriott swings to a third quarter profit of continued strength in north america and higher room rates, too. pricing power is improving as occupancy levels start to peak. the company narrowing its full year earnings, however fourth
5:17 am
quarter forecasts below analyst expectations. looking at the stock, up by over 2%, 2.3% almost in the german listing today. so let's give and you quick look at what's going on in the u.s. weekly jobless claims out at 8:30 eastern. forecast to rise by 10,000 to a total of 369,000. at 10:00, we'll get august factory orders expected to drop 6%. at 2:00, minuteses from the fed meeting will be released. james bullard is in memphis, tennessee to speak about the economy and monetary policy at 7:45 eastern. now still to come on the show, results of spain's latest bond auction are in. we'll have the details live from madrid.
5:18 am
5:19 am
5:20 am
another quick dar around sh markets. the markets in the u.s. expected to open a little bit higher. implied open for the s&p and nasdaq 2 or 3 points to the good. dow jones up by 35 or so. european equity trade, things actually deteriorated since we came on air. we did have modest gains about half percent higher when we
5:21 am
first could on air, but now down by about 0.3%. similar moves to the down side for the german markets. the cac down by 0.4%. bond markets, well, we are close to watching the situation in spain. 5.89% is the yield on the spanish ten yield. we're looking ahead to the ecb and the bank of england decisions today, as well. in that context, 1.4 4% for the ten year in germany. it was a pretty strong performance at spain's latest bond auction. yields shorted dated did fall. julia is in madrid. reverse demand, as well. you have to ask how closely correlated is the economy with these figures. does it give us a false sense of security?
5:22 am
>> it comes back to draghi's comments and anticipating help from the bonds. you have to look at the results, significant drop, 200 basis points tighter in that two year compared to the auction done just in july. worth mentioning the three rear slightly higher than the last auction, but you can't be fooled by that because that was done in september 20th actually. so it's already got the benefits of the potential bond buying plan. and what this has got us, now around 88% done it for their financing this year according to their initial estimates. the question is whether they have to increase that this year. but of course possibility of the bond purchases supporting the markets right now. moody's is also hanging over the market, the potential downgrade.
5:23 am
and we could get that at any time now. the other thing of course that's going on in spain, we have some details on the bad bank, but i have to admit, there's plenty of head scratching going on here in spain. we need more details. economy minister said that there would be a conservative valuation on some of these assets that will be passed into the bad bank, but he did temper that by saying this is a 15 year project. so the potential there for up side needs to be recognized, too. spain has been forced to write down about 140 billion euros worth of their loans and bad debt this year alone. but we have the stress test results and analysts are still questioning whether that level of write downs is enough. ultimately they do have 100 billion euros as an option for the banking sector here. one analyst we spoke to saided that would be more than enough. so still plenty of debate. ultimately it will come down to valuations.
5:24 am
>> what's the view on how the authorities are looking after the fundamentals of the economy when they're making various decisions versus trying to appease the markets. we had a guest on earlier that said european authorities are worrying too much about how the markets feel and not thinking enough about how sustainable the economy is and if the economy is fixed, the markets would look after themselves. it should be the economy leading the market, not vice versa. >> but you have a situation where the market -- if that can keep spain's access to the markets, then they can continue to fund themselves over the next few years.
5:25 am
yes, we're not answering the question about ultimately growth and supporting growth, but that's a separate issue. if spain can keep access to the markets, that will significantly reduce the size of the bailout that spain questions ultimately and right now that's what they're dealing with. >> thanks very much, julia. shops closed down on wednesday. demonstrations marked the first time in 30 years that the merchant class publicly turned against the government. president ahmadinejad has blamed international sanctions for the country's devaluation, but the u.s. secretary of state hillary clinton says the government only has itself to blame. >> i think the iranian government deserves responsibility for what is going on inside iran. and that is who should be held accountable. and i think they have made their
5:26 am
own government decisions having nothing to do with the sanctions that have had an impact on the economic conditions inside the country. >> for more on the currency crisis and the protests in iran and why trigger happy central banks should take note of what's happening in that country, go to our website. cn we have an analysis piece. earlier we asked you you your opinion on last night's presidential debate. here's a few of the comments. jeff tweeted from montreal, he says i rate romney's performance as stellar and obama's as lacking. two strikes for obama after his luke warm talk. peter from ireland says george bush was the problem, not obama. let us know what you think. join in the conversation right here on "worldwide exchange."
5:27 am
we'll get to some of your comments a little bit later in the show. time for a quick break. still to come, we'll bring in a democratic and republican strategist to grade the performance of president obama and mitt romney.
5:28 am
5:29 am
5:30 am
welcome to "worldwide exchange." these are your headlines from around the world. an aggressive mitt romney comes out swinging in his first debate with president obama. the two men sparring over how to fix the u.s. economy. waiting on spain, the ecb expected to hold steady on rates as central bankers meet today. country's president tells cnbc that europe's policymakers must remain focused. and madrid sees solid demand and yields coming down as the finance minister heads to london to raise funds for the country's bad banks. if you're just tuning in, thanks very much for coming along. ross will be back tomorrow. but i'm here for the next 30 minutes to run you through what's going on on the markets
5:31 am
around the world. let's start off by looking ahead to the start of the u.s. equity trade. expecting markets to open a little higher. fmoc minutes coming out later. and on this side of the world urks t the ecb and boe with their decisions, as well. just a few points higher. and let's look at some other market action and see exactly what's happening. the global 300 just ticking slightly higher. it's come off the highs of a little earlier, but just about hanging on to green hair row. european bourses, if you tuned in at the top of the show, we had plenty of green, modest gains. but since then, things have turned lower. in fact now the ibex down by 0.4%. the cac lower by half a percent. the ftse 100 is also dipping by
5:32 am
19 points. so that's the quit i trade around europe. bond markets, so far today big story has been the spanish debt auction. pretty robust demand. average yields dropping, as well, from the last debt auction. and they seem to have financeded about 80% of their -- cover about 80% of their financing needs for the year. so looking around the debt markets, ten year in the uk, 168 is where we are. the ten year in the u.s., treasuries at 162. just over. in spain then, 1.89% roughly. so certainly much healthier than the levels we had a few weeks ago. germa germany, continuing to move lower. very much perceived as a safe haven in european markets.
5:33 am
president obama and mitt romney met face to face in their first presidential debate in denver wednesday night. the men sparred mostly over the u.s. economy focusing on taxes, the deficit, remaking head care and job creation, too. romney came out on the offensive, casting the president as a proponent of big government and spending. he would raise taxes on small businesses and obama, though, accused his rival of trying to double down on policies that led to the recession and financial crisis. >> the president has a view very lar similar to the view four years ago. spending more, taxing more, regulating more, trickle down government would work. >> the genius of america is the free enterprise system and freedom. and the fact that people can go out there and start a business, work on an idea, make their own decisions. but as abraham lincoln understood, there are also some things we do better together.
5:34 am
>> so the vice presidential candidates, paul ryan and skrjo biden will meet for their only debate next week. president obama and mitt romney head back out to the campaign trail today where the president making stops in colorado and wisconsin. romney will travel to virginia. let's get a bit more into this debate. joining us now for more is a republican strategist and former mccain/palin aide. and a democratic strategist and former senior adviser to the presidential campaignses of john e he hedwards and wesley clark. let's start with you. by all accounts this was going to be the debate where mitt romney would be the strongest on the issues around the economy because really the president's coming from the back foot on these issues in what have been difficult few years of his leadership so far. so he couldn't fail on do well
5:35 am
surely. >> all accounts going in did not add up to what actually happened. the expectations for mitt romney were high, but he exceeded all those expectations. this was the best debate of his political life going back to his first campaign in '94, the gubernatorial campaigns in massachusetts and all the debates they had in the primaries. this was a great performance by mitt romney on style, on substance, all across the board. one of the telling moments when you look at the screen shot of the two, you had mitt romney looking right at the president, but then the president either looking away or looking down. he looked like someone who was simply not ready, who did not want to be there. he didn't want to be at that debate. at some point you also felt like he thought it was beneath him to be there. but mitt romney enjoyed every minute of it and he really trounced barack obama every point of that debate for an hour and a half. >> obviously everyone in this
5:36 am
debate has their own side, so i guess you would say that. but boris, doing well in a debate is one thing. i imagine to persuade an entire country to vote for you when you've already said publicly that you only really care about less than half of them is quite another, isn't it. he has a lot of ground to make up. >> that's not what mitt romney said. he didn't say he only cares about 53% versus the 47% which i assume that's what you're rivering to. what he said is that 47% of the country would not respond to his message about lowering or cutting taxes because they already don't pay taxes. mitt romney is showing time and time again that he's going to be the president of the whole country and his plan really speaks to that both on economy, foreign policy and other points about so that there is no question this debate is important, but also you are right, there's a long time left. there's two jobs reports that are left. about 33, 34 days that are left in this campaign. it's a long time. but what you saw going into this debate are polls tightening in florida, in ohio, all across the
5:37 am
board in the battleground states. and this will build on that momentum. and when the jobs report comes out, there will not be a positive jobs report by all expectations from president obama that will again build on that momentum and add to mitt romney really getting toward november 6th with full steam ahead. but there are two debates left. it's important for mitt romney not to have a let down in the next debate which is more of a town hall structure. and that bodes well for president obama. but if mitt romney can keep going with the strength that he did in the first debate, it will be a very tough election for president obama. >> chris, let's bring you in. boris reckons that romney smashed it then this time around. obama looks i guess a bit disengaged from the whole thing. did he let himself down last night, chris? >> well, first let me address one point, the comments boris made about the 47%. to be direct about it, governor romney called 47% of americans
5:38 am
victims. now, that is not necessarily a winning strategy. going back in terms of the debate, i'll be the first one to admit that governor romney had a very good debate. he came out strong. he came out from the first answer out, he was out there being very bold and aggressive. i think the president had some good moments, in particular on the exchange on health care, but what he didn't did which i find inexplicable is what's been working the last 90 day. which is exposing the fact that when you scratch past the surface of every piece of rhetoric and policy, there is nothing there. you saw it last night. governor romney talked about his trillion dollars in tax cuts and his trillion dollars in additional defense spending. it is mathematically impossible to accomplish what governor romney proposed. he sat there and talked about working with congress, addressing health care. the most ironic part was when governor romney was out there discussing -- >> that's simply not true.
5:39 am
>> criticizing the president when in fact his policy similar to the president proposed. >> that's not true. if you look at what president obama was doing -- >> there's a long ways before the election is over. governor romney had one good day out of a horrific campaign by any standard. now the question is what happens after this. >> the campaign was so horrific, chris, then the polls wouldn't be as close as they are and national polls have them neck and neck. >> i'm not sure what polls you're remembering ferring to. >> let me finish. romney is up in some of the daily tracking polls. so the campaign is not -- again, chris, hold on a second. >> that's not factually true. he down in the balance will you please every single tracking poll. >> again, chris, if you look at rasmussen over the last week, there's been days when they're neck and neck.
5:40 am
you look across the board, it's very close. >> i'm on the phone and i can tell you the polling numbers off the top of my head, you are wrong. in ohio, he's down. in virginia, he's down. tell me the battleground states where governor romney is ahead. tell me the one. >> in ohio, he's within the margin of error. in florida, he's within the margin of error. and again, if it's such a horrific campaign, and you know a lot about horrific campaigns, then he wouldn't be as close as he is. going back to the point about scratching beneath the surface, mitt romney was the one that went over and over again through specifics. president obama couldn't go anywhere near his own record. and you know why, because he's failed for four years. he's got nothing to talk about. all president obama could talk about is mitt romney's plan because he doesn't have any plan of his own.
5:41 am
all he keeps talking about is how badly mitt romney would do, not how well he's done. >> the purchases think by one debate performance this election has turned, they're completely devoid of reality. here's the facts. there's still a long ways to go and ibd the first one to say it, you don't -- no election is over until it's over. >> why didn't the president talk about his own record? >> let me finish. the reality is, when you look at the battlegrounds, governor romney is not in a good position. that is a fact. the next debate, we will see how governor romney does. but let's be honest, there is no one in the united states that can credibly believe unless they are partisan republican that governor romney's mathematics on his budget work. they do not. there is no one that believes that his criticism of president obama's health care policy worked because they are laughable on it face. you can sit there and talk about his policies, but the reality is
5:42 am
the same policies that created the mess the president inherited. >> this is typical democratic spin. democrats have no options but to spin off the last -- 48% of the country agree with mitt romney. president obama is not a popular president. he has not done a good job. hold on, now let me finish, chris. >> is he ahead of can governor romney? >> now let me finish. if you look at the dynamic between the two candidates, there is a reason that president obama couldn't even talk about his own record. what achievements did you hear about a in last night's debate? there were no such achievements. >> i understand that you -- republicans like to pretend that somehow this financial crisis and the disaster the president inherited was somehow created by what, the president? he inherited it. since he's inherited it, he's
5:43 am
dealt with it. >> chris and boris, guys -- >> how many jobs have been created? >> we have to switch the cameras off if they don't stop talking soon. chris and boris, really appreciate the robust debate. you both win the prize for talking over each other. we really enjoyed having you on to thrash these issues out. thanks both for coming on to speak with us. boar ris the republican sfraenlgist and chris as you may also assume the democratic strategist. still to come on worldwi"worldw exchang exchange", the vatican part of a protest. find out more after the break.
5:44 am
5:45 am
5:46 am
welcome back. these are your headlines. romney and obama spar over the economy with the presidential challenger coming out swinging in his first debate. the ecb seeing holding steady on rates when central bankers meet today. and spain sees yields fall as finance minister tries to drum up interest in the country's bad bank.
5:47 am
greek finance minister has talked down rumors. said the country is on a good path and the troica should report on greece's latest us as tear pi efforts by mid october. a hedge fund manager who built a major position is seeing his strategy pay off. third point offshore fund gained 3.4% in september. anticipation of a strong reaction from the ecb. and a protest has ended in the vatican where he had been demonstrating against eu laws. he stood on one of the window lenls for more than 24 hours. he was complaining against an eu
5:48 am
directive which would reform rules to licenses. operators have said the new rules threaten the jobs of some 600,000 resort workers. still to come, we talk shopping ahead of september retail sales data with a guest who says thrift may be the new bling.
5:49 am
5:50 am
european markets are trading town. we did see the green at the start of the show, but no longer the ftse down. same for the dax and cac. ibex held unreasonably well but also trading lower now. in the state, futures indicating
5:51 am
a positive start to trade. just a few points higher for the s&p and nasdaq, the dow could open up by 30 points or so when trade gets under way there. on the agenda today in the u.s., weekly jobless claims out at 8:30 eastern, forecast to rise by 10,000. 10:00 a.m. brings august factor orders. expected to drop by 6%. at 2:00 the minutes from last month's fed meeting will be released. james bullard is in memphis, tennessee speaking about the economy and monetary policy. that's at 7:45 eastern time. >> a look at retail sales figures rose only marginally as shoppers cut back to pay down debt. data also suggesting australian kus are turning to cheaper offerings from foreign and online retailers. aussie dollar slipping in reaction.and online retailers. aussie dollar slipping in reaction.from foreign and onlin
5:52 am
retailers. aussie dollar slipping in reaction. states will report same store sales today excluding the drug store sector. coming in well below the 6.4% growth rate we had in the same period last year. costco beat the street, 6% same store sale growth. slightly above analysts forecasts then. so where was the strength in the back to school shopping season? joining us for more is sw retail advisers president and cnbc contributor. thanks for coming along. let's look back to start with the back to school season is important. what did it tell us about how the rest of the year will shape up? >> back to school is very important here after we get through august, certainly there were plenty beats in august and good news, but that's really a clearance month. so back to school is really the first indication of how the consumer is feeling and are they willing to pay full price. and as the numbers trickle in
5:53 am
this morning, i think really consensus is that september slowed. traffic was terrific. you saw promotions ramp up. a couple retailers said traffic slowed during the month, so expectations are somewhat tempered as the numbers roll in. >> how about shaping up for the holiday season then? how are comparisons looking with last year, any thoughts generally on how the retail sector will shape up before we get to specifics? >> september comparisons are a bit tougher year over year and as we roll into october/november, comparisons get a bit easier and that's largely because if you recall last year, we really didn't have a winter, whether that was here in the states or in london where you are. so there was a lot of leftover merchandise, margins were really clobbered because of mark downs because that cold weather never came. and really never inspired the consumer to get out there and purchase. so the good news is this year we
5:54 am
really are facing easy comparisons on the margin side. >> so what would be the names to go for, the names to avoid in the holiday season for investors? >> i think you want to stick with the momentum is and where really some retailers are driving business through newness and value. and then that's a lot of the fashion retailers. you're looking h and m hat a blip of a month in august, but that's also been taking share. and then you want to look at the limited, victoria secret that just opened in london, that's where there's been newness, that's been a consistent outperformer there. and then in the it department store space, certainly you've seen jcpenney trip over itself month after month with its new strategy. macy's has been gaining share there. so that's been a consistent outperformer. and i think that will remain through the holiday season. so those are some of the names. and lastly, if you look at the off price retailers, whether
5:55 am
that's tjx or ross store, as the consumer is becoming who are value oriented, there is share trickling down to that space. >> stacey, thanks so much for that. >> good to see you. >> some tips about some u.s. retailers opening up this london. market research for me. earlier we asked you for your opinions on last night's presidential debate. here are a few of the comments. michael tweeted us from chicago saying obama's performance seemed like team usa day three ryder cup. bad start, worst finish. jeff says two strikes for obama after his luke warm dnc talk, as well. if you want to keep the conversation going, you can get in touch with us by e-mail at
5:56 am
world by twide at, @cn, or at beccy meehan. we have one viewer bruce who says that arrogance and ego hurt obama badly and may cost him the election. thanks for your comments. one viewer says romney was in command trhful a georgia net tick, obama was defensive, evasive and tired. incoming president always has the disadvantage of being really busy running the country, as well. but thanks so much for your comments. do continue to write in and let me know what you think. that's it for today's show. thanks so much for watching "worldwide exchange." appreciate your company.
5:57 am
5:58 am
5:59 am
good morning. today's top stories, a clash of the candidates. president obama and mitt romney square off on policy differences including taxes, spending, entitlements, health care, education and more. it was a late night for everyone. in global market news, the ecb set to announce it latest policy decision. plus on the corporate front, 3m drop as deal for office products amid antitrust concerns and hp shares drop to a nine year low following a disp appointing outlook. it is thursday, october 4th, 2012, "squawk box" begins right now.


info Stream Only

Uploaded by TV Archive on